Chapter 4 & 5 End 0f Chapter Quiz/Review. Practice What You Know Suppose that the price of candy bars increases by 100%. As a result of this, you decide.

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Presentation on theme: "Chapter 4 & 5 End 0f Chapter Quiz/Review. Practice What You Know Suppose that the price of candy bars increases by 100%. As a result of this, you decide."— Presentation transcript:

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Chapter 4 & 5 End 0f Chapter Quiz/Review

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Practice What You Know Suppose that the price of candy bars increases by 100%. As a result of this, you decide to purchase 50% less candy bars. How would you describe your demand for candy bars? a.Demand is elastic. b.Demand is unit elastic. c.Demand is inelastic. d.Demand is perfectly inelastic.

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Practice What You Know Suppose that Doug receives a pay increase at work, and his income increases by 20%. As a result, Doug decides to buy 12% less ground beef. For Doug, ground beef is a(n) ________. a.luxury good b.necessity good c.normal good d.inferior good

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Practice What You Know Economists have studied that when the price of chicken increases, people purchase less rice. With these two goods, which of the following is true? (E C = Cross-price elasticity) a.E C < 0, chicken and rice are complements. b.E C > 0, chicken and rice are complements. c.E C < 0, chicken and rice are substitutes. d.E C > 0, chicken and rice are substitutes.

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Practice What You Know In terms of price elasticity of demand, which of the following goods do you think is the least elastic (most inelastic)? a.new house b.electricity to power your home c.a specific brand of breakfast cereal d.new vehicle

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Practice What You Know Suppose a firm is selling a product at a price on the inelastic portion of the demand line. This firm could increase revenue by doing what? a.lowering the price, selling more units b.lowering the price, selling less units c.increasing the price, selling more units d.increasing the price, selling less units

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Practice What You Know What will be the effect of a non-binding price ceiling? a.A surplus will be created. b.A shortage will be created. c.There will be no effect. d.The effect is unknown.

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Practice What You Know In the event of a binding price ceiling, what is one function that a black market serves? a.reduces the shortage caused by the price ceiling b.decreases the price even further c.creates a monopoly d.causes a surplus of the good

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Practice What You Know What is one unintended consequence of rent control? a.People in rent-controlled units will relocate more often. b.Landlords may not maintain rental units. c.Too many apartments will be built, creating a surplus of units. d.People will choose not to live in big cities.

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Practice What You Know Which of the following is true about labor markets? a.The minimum wage is a price ceiling. b.Unemployment is a labor shortage. c.Firms supply the labor. d.None of the above.

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Practice What You Know Supply and demand generally become more elastic in the long run. This means that shortages caused by price ceilings _________ in the long run. a.disappear completely b.become smaller c.become larger d.become infinitely large